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October 28, 2020

Jeffrey Franks: The new IMF agreement will be ‘precautionary’

The new agreement between Romania and the International Monetary Fund (IMF) will “certainly” involve a smaller sum than the current deal, and the money will be released only if unexpected problems occur, the head of the IMF mission to Romania, Jeffrey Franks, said in Washington, Realitatea.net reports, quoting Mediafax.
According to the IMF official, the new deal that will extend the stand-by agreement signed last year will most likely be a “precautionary” one, which means that the Fund will release a certain sum upon each evaluation, but the money will go neither to the Romanian Central Bank (BNR), nor to the state budget, as it was the case with the current deal. The funds will stay in Washington and will be available for unexpected situations, such as a regional crisis that will put pressure on the exchange rate.

On the other hand, the International Monetary Fund estimates that the Romanian economy will drop by 2.9 pc this year, but will reverse the trend and pick up 1.5 pc in 2011, according to the latest IMF forecast released on Wednesday. Inflation will reach 5.9 pc in 2010, to be followed by a 5.2 increase of consumer prices in 2011, IMF experts estimate. Romania’s current account deficit will stand at 5.1 pc of the GDP in 2011, followed by 5.4 pc of the GDP next year, reads the IMF forecast. According to the Fund, unemployment in Romania will fall to 7.1 pc next year, from 7.2 pc in 2010.

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